Hepatitis C virus (HCV) is a major public health problem with more than 170 millions people are currently infected. Most infections become chronic often leading to liver cirrhosis and cancer. In the United States 10,000 to 20,000 deaths a year are caused by chronic HCV infection. It is the most common cause of liver transplantation. It is now believed that long-standing chronic inflammation secondary to HCV infection is the main cause of hepatocellular carcinoma. The mechanisms underlying the development of long-lasting chronic inflammation and cancer are not well understood. Current therapy for chronic HCV infection, a combination of IFN-a and ribavirin, but only half of the patients can get rid of the virus infection by this regimen. The reasons why HCV infection leads to a high rate of chronic infection in human and often develops resistance to interferon therapy are not clear. The overall goals of this proposal are to understand the mechanisms of interferon action and resistance in chronic HCV infection, and develop alternative antiviral strategies to inhibit HCV replication. During the last couple of years our research has generated the following evidences: (i). We have developed interferon-resistant replicon cell lines and determined that a defect in the Jak-Stat signaling pathway can lead to low-level activation of ISRE promoter (IFN-promoter) and interferon resistance phenotypes. (ii). We have published data showing that IFN-a, IFN-[unreadable] and IFN-? each inhibits HCV replication. This inhibitory effect of interferon is at the level of ribosome loading to the 5'UTR sequences used by the virus to translate its genome by an internal ribosome entry site (IRES) dependent mechanism. (iii). Recently, we have reported that small interfering RNA (siRNA) targeted to the IRES region that can inhibit translation of six different HCV genotypes. Based on these preliminary studies our hypothesis is that the expression of the Jak-Stat signaling molecules that control the transcription of interferon-inducible genes varies among infected hepatocytes in the liver. Hepatocytes with a defective Jak-Stat signaling escape interferon action at the level of IRES translation leading to chronic persistent virus replication. We propose that encapsulation of siRNA-74 into nanoparticles by the use of biodegradable polymers will efficiently deliver siRNA to the hepatocytes and may provide a novel therapeutic strategy for chronic HCV patients who are non-responders to interferon. To test our hypothesis we have developed three Specific Aims. In Specific Aim 1, we will investigate hepatic resistance to IFN-alpha in HCV chronically infected humans. In Specific Aim 2, we will investigate the antiviral mechanisms of IFN-alpha against hepatitis C virus. In Specific Aim 3, we will formulate biodegradable nanocapsules as a non-viral method to deliver siRNA to inhibit viral target of interferon to overcome mechanisms of resistance. If these experiments are successful then it will increase our understanding on the mechanisms of interferon action and resistance against chronic HCV. This research will potentially leads to an innovative therapeutic strategy for chronic hepatitis C patients not responding to interferon therapy. Public Health Relevance: Chronic hepatitis C virus infection is the major cause of liver cancer in the United States. This research proposal intends to develop intracellular immunization strategy to inhibit HCV. If these experiments are successful it can potentially lead to a therapy for chronic HCV infection and prevent liver cancer.